Business Overview and History
AngioDynamics, Inc. (ANGO) is a leading medical technology company dedicated to restoring healthy blood flow, expanding cancer treatment options, and improving patient quality of life. With a focus on innovation and strategic initiatives, AngioDynamics has transformed its business, positioning itself as a strong contender in high-growth markets.
AngioDynamics was founded in 1988 and is headquartered in Latham, New York. The company designs, manufactures, and sells a diverse portfolio of medical devices used by healthcare professionals for vascular access, the treatment of peripheral vascular disease, and oncology and surgical applications. Its products are primarily used in minimally invasive, image-guided procedures.
In its early years, AngioDynamics focused on developing and commercializing core products for vascular access, such as ports and catheters. The company went public in 2004, raising capital to fund further product development and expansion. Over the next decade, AngioDynamics steadily grew its product portfolio and geographic reach, making strategic acquisitions to expand its offerings in areas like peripheral vascular disease treatment and oncology.
In 2012, AngioDynamics faced a significant challenge when C.R. Bard, Inc. filed a patent infringement lawsuit, claiming certain AngioDynamics port products infringed on Bard's patents. This litigation spanned over a decade, with AngioDynamics ultimately prevailing in 2023 when the court found Bard's patents invalid.
Over the years, AngioDynamics has undergone a strategic transformation to align its business with high-growth, high-margin market opportunities. In 2021, the company divested its dialysis and BioSentry businesses for $100 million, followed by the sale of its PICC and midline product lines in 2024 for $34.5 million. These divestitures have allowed AngioDynamics to focus on its core MedTech and med device segments, which now comprise 43.2% and 56.8% of total revenue, respectively, as of the second quarter of fiscal year 2025.
Financials
AngioDynamics' financial performance has shown promising signs of improvement in recent quarters. For the second quarter of fiscal year 2025, the company reported net sales of $73 million, representing a 9.2% year-over-year increase. This growth was driven by a 25% rise in MedTech revenue, which included strong performance across the company's Auryon, mechanical thrombectomy, and NanoKnife platforms.
Despite a GAAP net loss of $10.7 million, or $0.26 per share, in the second quarter, AngioDynamics reported an adjusted loss per share of $0.04, a significant improvement from the $0.08 loss per share in the prior-year period. The company also generated $2.5 million in operating cash flow during the quarter, highlighting its progress towards profitability.
For the most recent fiscal year ended May 31, 2024, AngioDynamics reported annual revenue of $304 million. However, the company faced challenges, reporting a net loss of $184 million and negative operating cash flow of $28 million for the fiscal year. The annual free cash flow was also negative at $34 million.
Liquidity
As of November 30, 2024, AngioDynamics had $54.1 million in cash and cash equivalents and no outstanding debt, providing a strong liquidity position to support its growth initiatives. The company is targeting to end fiscal year 2025 with approximately $60 million in cash on the balance sheet.
AngioDynamics' financial health is further demonstrated by its liquidity ratios. As of May 31, 2024, the company had a current ratio of 1.98 and a quick ratio of 1.24, indicating its ability to meet short-term obligations. The debt-to-equity ratio stood at a low 0.03, reflecting the company's minimal leverage.
Operational Highlights and Strategic Initiatives
AngioDynamics' strategic transformation has centered around expanding its addressable market and strengthening its position in high-growth, high-margin product segments.
In its MedTech segment, the company has seen exceptional performance across several key platforms:
Auryon Atherectomy System: Auryon continued its sustained growth, increasing revenue by 21.8% year-over-year in the second quarter. AngioDynamics has successfully shifted its focus to the hospital setting, where it is gaining market share from entrenched competitors. For the six months ended November 30, 2024, Auryon sales increased by $5.2 million compared to the prior year.
Mechanical Thrombectomy: The combined revenue from AlphaVac and AngioVac, the company's mechanical thrombectomy platforms, grew by 46.2% year-over-year. AlphaVac, which received FDA clearance for the treatment of pulmonary embolism, has seen strong adoption, while AngioVac has benefited from increased awareness and cross-selling opportunities. Sales of the thrombus management platform increased by $3.5 million for the six-month period ended November 30, 2024.
NanoKnife System: AngioDynamics made significant progress with its NanoKnife system, receiving FDA clearance for prostate tissue ablation and securing new CPT Category I codes for reimbursement. These milestones, combined with the company's clinical data and marketing efforts, position NanoKnife for accelerated growth in the prostate cancer treatment market. NanoKnife sales increased by $0.3 million in the three-month period but decreased slightly by $0.1 million in the six-month period ended November 30, 2024.
The MedTech segment as a whole saw strong performance, with net sales increasing 24.4% and 16.2% for the three and six months ended November 30, 2024, respectively, compared to the same periods in the prior year. The segment's gross profit margin improved to 63.7% and 63.5% for the three and six-month periods, respectively.
In contrast, the Med Device segment, which includes core products such as PICCs, Midlines, Ports, Venous, Microwave, and Oncology products, experienced a decline in net sales of 23.1% and 24.1% for the three and six-month periods, respectively. This decrease was primarily due to the divestiture of the PICC and Midline businesses in February 2024. However, the segment's gross profit margin improved to 47.9% and 48.0% for the three and six-month periods, respectively, driven by favorable pricing and product mix.
To further enhance its operational efficiency and profitability, AngioDynamics announced on January 5, 2024, a plan to transition to an outsourced manufacturing model. This initiative is expected to generate approximately $15 million in annual cost savings by fiscal year 2027.
Additionally, on July 16, 2024, the Board of Directors approved a share repurchase program authorizing the company to repurchase up to $15 million of its outstanding common stock, demonstrating confidence in the company's financial position and future prospects.
Geographic Markets
While AngioDynamics' sales are primarily in the United States, the company has been expanding its international presence. For the six months ended November 30, 2024, approximately 13% of net sales were to customers outside the United States, indicating potential for further global growth.
Risks and Challenges
While AngioDynamics has made substantial strides in its transformation, the company faces several risks and challenges that investors should consider:
1. Competitive Landscape: The medical device industry is highly competitive, with larger, well-established players that may have greater resources and bargaining power. AngioDynamics must continue to innovate and differentiate its products to maintain its market position.
2. Regulatory Approvals: Obtaining regulatory approvals, particularly for new indications or product enhancements, can be a lengthy and complex process. Delays or setbacks in the regulatory process could impact the company's growth plans.
3. Reimbursement Landscape: Changes in the reimbursement environment, including pricing pressures and shifting payer policies, could affect the adoption and profitability of AngioDynamics' products.
4. Integration and Execution Risks: The successful integration of acquisitions and the execution of the company's operational initiatives, such as the manufacturing transition, are critical to achieving the anticipated cost savings and synergies.
5. Financial Performance: Despite recent improvements, AngioDynamics has reported significant net losses and negative cash flows in recent periods. Achieving sustained profitability and positive cash flow remains a key challenge for the company.
Outlook and Conclusion
AngioDynamics has made significant strides in transforming its business and positioning itself for long-term growth. The company's focus on high-growth, high-margin MedTech platforms, such as Auryon, mechanical thrombectomy, and NanoKnife, has driven impressive revenue growth and improved profitability.
For fiscal year 2025, AngioDynamics expects revenue to be in the range of $282 million to $288 million, representing growth of 4.2% to 6.4% over the prior year. The company has raised its guidance for MedTech net sales growth to 12-15%, up from the previous 10-12%, while expecting med device net sales to be about flat. AngioDynamics now anticipates adjusted EBITDA in the range of $1 million to $3 million, a significant improvement from its previous guidance of a loss of $2.5 million to breakeven.
The company has also improved its outlook for adjusted loss per share, now expecting a range of $0.34 to $0.38 for fiscal year 2025, compared to the previous guidance of $0.38 to $0.42. AngioDynamics continues to expect gross margin in the range of 52-53% for the fiscal year.
As AngioDynamics continues to execute on its strategic initiatives, strengthen its product portfolio, and enhance its operational efficiency, the company appears well-positioned to capitalize on the growing demand for innovative vascular and cancer treatment solutions. While the company faces competitive and regulatory challenges, its focus on high-growth markets and strong financial position provide a solid foundation for future success.
The company's commitment to research and development, along with its selective approach to business development opportunities, underscores its dedication to driving long-term growth and profitability. As AngioDynamics navigates its transformation and expands its presence in international markets, investors will be closely watching for continued progress in financial performance and market share gains in its core MedTech segments.